World oil prices drop sharply, down to 12-week low

Specifically, Brent crude oil prices fell 4.2 USD to 99.6 USD/barrel. At the same time, US WTI oil prices also decreased by 3 USD to 96.2 USD/barrel.

According to analysts from investment bank Goldman Sachs and UBS, oil prices fell due to concerns about the possibility of an economic downturn.

Specifically, UBS has given many reasons for unstable oil trade such as inflation, the strengthening of the greenback, hedge funds reacting to the decline in oil prices, manufacturers' risk insurance and concerns about the new COVID-19 wave in China.

Meanwhile, US job growth in May showed that the labor market remains tight. This could see the Federal Reserve continue to raise interest rates to bring inflation down to 2%.

Previously, the opening interest rate for WTI futures contracts fell to its lowest level since May 2016 as investors cut risky assets.

Robert Yawger, Executive Director in charge of energy futures contracts at Mizuho, commented that there are concerns in the market about the possibility of sharp decline in energy demand due to economic recession. Along with that, WTI oil's open contracts have decreased to their lowest level in many years, causing a lack of liquidity in the "black gold" market.

Similarly, Kristalina Georgieva - General Director of the International Monetary Fund (IMF) said that the outlook for the global economy has been weak since April and the possibility of a global recession next year due to increased risks cannot be ruled out.

Oil prices fell today as the American Petroleum Institute (API) reported on July 6 an increase in US crude oil reserves of 3.825 million barrels, while analysts predicted a decrease of 1.1 million barrels. API also said that gasoline inventories decreased by 1.814 million barrels; distillate inventories decreased by 635,000 barrels.